Indonesia restricts investment in new nickel intermediate products smelters

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President Prabowo recently signed Government Regulation No. 28 regulating risk-based business licensing.The policy restricts investment projects in new nickel smelters specializing in the production of nickel intermediate products (e.g. nickel matte, mixed hydroxide precipitates MHP, ferro-nickel FeNi and nickel pig iron NPI), which may affect relevant planned projects from 2027 onwards.

Regulations require nickel smelters to commit to advancingdeep processing, doesn't stop at nickel intermediates. AdoptionPyrometallurgical technologyThe enterprise shall submit the non-productionNPI, FeNi, and nickel matte declarations; use of theHydrometallurgy or High Pressure Acid Leaching (HPAL) TechnologyCompanies that only produce MHP (commonly used as a raw material for electric vehicle batteries) will also be restricted.

These smelters are in the manufacturing sector and are subject to the Ministry of Industry's issuance ofIndustrial Undertaking License (IUI)Management. Analysts at Citigroup pointed out that the policy may lead to delays or even the cancellation of some projects under construction, and that although it does not directly affect the projects under construction that have been granted IUIs, it will have an impact on projects that will be completed after 2027. He mentioned that the details of the policy are still to be clarified, including the level of enforcement stringency. The government is using this to show that it is addressing the domesticNickel oversupplyof determination, though the new regulations were released in June and have only recently become a hot topic of market discussion.

# Policy Information